Credit/Debt

I am Getting a Financial Windfall

Recently, I found out that I will be getting a financial windfall.  Apparently several years ago (as in almost 20), there was a mistake with social security withholding during graduate school.  There ended up being audits and court cases, etc.  I simply provided some information that confirmed I was indeed a student at the time and gave the auditor permission to handle the rest.  I think the IRS got involved.  This all started several years ago.

Well, I got notice that I would be getting a check toward the end of this month.  Assuming that I actually see it, the amount is not all that small.  The money was actually put in escrow in an interest bearing account and actually doubled during the time that this has been going on.

Plans for the Money

Needless to say, the money will come at a good time.  I am working on paying off debt and feel that I am in a good frame of mind to be able to accept this money and not do anything stupid with it.  I plan on using the funds (since they weren’t expected) to pay off one of my credit cards and to pay the property taxes on the commercial building that will be coming due in May.

This will help me keep on track with my goal to eliminate consumer debt in another 34 months and provide some extra cushion so I don’t have to scramble for the tax money.  The timing couldn’t be better.

It is about time for some good news.

Carnivals

It has been forever since I linked to the carnivals that have featured my blogs so here goes:

Protecting My Assets

It has been quite the busy month of February as you can tell from my lack of posting.  I have been trying to negotiate and restructure a deal with a partner in the commercial building that we own (or rather bank owns).  He is the tenant and wanted to construct the building since he was tired of paying rent to someone else.  It makes sense on paper, but when the economy struggles then having lower fixed costs make the most sense.

Taking Over the Building

Since I had quite a bit invested in the building, I determined it would be better to suck it up and just take it over entirely than to let things languish like they had for the past several months.  I would have ultimately born some of the responsibility anyway so it is better to get it under control now, get in the bankers’ good graces and figure out some more solutions down the road if necessary.

But it will hamper the debt payoff plan.  You can read more about that at my newest blog, Shredding Debt.  Despite that, I still plan on being aggressive and will see what I can accomplish over the next 3 years.  I will know more once the building payments are caught up and I can see what my budget and cash flow will look like the rest of the year.

At least the money that is spent will create some real estate losses and lower my tax bill so the ultimate impact may not be as bad as it could be.  Plus I will have 100% control of the asset so that when it is paid off, I will be in great shape.  It is just the journey that might be tricky.

Looking Forward to Learning

I do look forward to learning more about the commercial real estate business and making new contacts.  I think it will be a great experience that can only help me as I continue to become more involved in real estate.  Ultimately, I would like to own more property.  It will probably be after the consumer debt is paid off and some more of the kids move out of the house.  But having something to do with my time after I retire from my full-time employment will be very good.

Carnivals:

Rental Refi Did Not Work

I am kind of disappointed this morning since I found out yesterday that the refinance on the rental homes would not work.  Apparently, my credit score is not good enough.  Ever since 2008, it has been incredibly difficult to get credit so I will be focusing on getting out of debt instead.

Ultimately, it turns out that the net impact on the monthly cash flow won’t be all that different without the refinance.  That is because I had to have 2 appraisals and one came in below the expected amount.  As a result, I had set aside $10,000 to bring to closing in order to save about $650-$700 per month through decreased payments.

Now that the refinance won’t be going through, I will using that money to pay down a credit card balance in order to save over $2300 per year in interest.  Once I get this card paid off which should be in the next few months, I will save almost $800 per month in cash flow which can be added back into the budget.  So all is not lost with plan B.

Plan C

Then once that card is paid off and I get a little more credit card debt eliminated, my credit score may very well be in a better place that I could refi the rental houses, decrease my interest rate and my term.  I don’t anticipate rates moving up any time soon.  I would think that I have a year or more to get a better interest rate.

If not and rates start to increase, that would mean that the economy is heating up which will only help my retirement account investments in the stock market.  So I look at it as a win-win.

With this behind me for the time being, I can now focus on getting the business transaction complete and meeting my 2 goals for this year which are losing weight and paying off debt.  In fact, I am about to launch a blog solely devoted to working my way out of debt which should bring some increased accountability and motivation to the equation.

I will let you know when it is up and running.

Carnivals

Here are the recent carnivals that have included articles from my blogs: